FICCI-KPMG-Report-13-FRAMES

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58 04 Films A blockbuster year © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The power of a billion: Realizing the Indian dream 59 Introduction After several years of muted growth, 2012 was an exciting year for the Indian film industry with the audience returning to the theaters. India’s domestic theatrical revenues grew by 23.8 percent Y-o-Y, contributing 76 percent to the INR 112.4 billion film industry 1 . Digital distribution played a significant role in increasing the reach of the industry. The industry has begun penetrating tier II and III markets and entertaining the un-served population which sits near the bottom of the pyramid. All this has been made possible by leveraging technology which is allows for a movie watching experience at an affordable cost and in a secure environment. Indian cinema has continued to enchant the Indian audience for almost a century now and it is expected to continue on its growth trajectory and be worth INR 193.3 billion by 2017 1 . Domestic theatricals will continue to be the major growth driver for the industry while ancillary revenue streams will also grow rapidly albeit off a smaller base. “ The Indian Film industry has continued to enchant and entertain not only Indians but audiences across the globe. Celebrating the 100th year of Indian Film industry, I believe we have come a long way and matured as an industry. India is the land of captivating story tellers and our strong cultural heritage adds to our image of the land of romance, mystery and entertainment. The industry is at the cusp of another change with digital technologies enabling greater reach of the medium thus ensuring exciting times ahead. “ - Ramesh Sippy Co-Chairman, FICCI Media and Entertainment Committee Production Professionally-run production houses are competing with the family-run banners to bring in greater sophistication and efficiency across the value chain. The approach has shifted from producing pure star driven films to experimenting with content and providing a platform to newer talent. Films such as ‘Paan Singh Tomar’ and ‘Gangs of Wasseypur’ have pushed the envelope on the kind of content that works in India and have managed to achieve unanticipated box office success. Although production costs have escalated by 15-20 percent in 2012 2 , these have been more than offset by strong box office performance. While the cost structure varies based on the budget and star cast, artist fees continue to form a major component of film’s budget for most large productions. Bollywood and Hollywood production houses are moving into regional markets which are also observing a tectonic shift in the consumption pattern of the audience. The new generation in regional markets is more receptive to nonmainstream films and is encouraging experimentation with content. 01. KPMG in India analysis 02. Industry discussions conducted by KPMG in India For these films, co-production continues to be the preferred business model. Production houses see prudence in teaming with peers who know those local markets. Both international and Bollywood studios are leveraging coproductions deals for entering newer markets as they learn the pulse of the vernacular audience. Local producers are leveraging the national and international distribution strength of their co-producers and taking their content to newer geographies. “ 2012 was a fantastic year for the film industry with differentiated content and talented debutants attracting audiences to the theatres in larger numbers. This was also aided by superb promotions by production houses and studios, as everyone battled it out to enjoy a big opening weekend. 2013 has begun on a great note and promises to set new benchmarks in promotions and pre release efforts, and thereby achieve bigger and better opening figures. “ - Apoorva Mehta CEO, Dharma Productions “ Last year, we have seen a huge pool of new talent come into the industry and taste success. That’s a great sign for the industry. However, we need to keep a check on the production and marketing costs. The production costs are disproportionately high. Meanwhile, marketing needs to be aggressive but cost effective. While we have a rich INR 1 billion plus club, we need to see how much ROI are we really getting on the projects. Small is big literally with some tightly budgeted films making a gold run at the box office. It looks likely that the revenues from C&S are going to slowdown as well, so it matters more to us that we keep production costs in check because our dependence on theatricals is bound to increase. We need adequate support from Government of India. There is tremendous pressure due to high entertainment tax rate and service tax and the industry needs to engage Government seriously in this regard. “ - Vijay Singh CEO, Fox Star Studios © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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42 Print Regional to the rescue 58
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06 Round up of the year that was Th
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FICCI 2013 143 “ The Amendments t
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09 Outlook for the year The power o
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11 Technology The power of a billio
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Acknowledgement We acknowledge the
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FICCI-KPMG-Report-13-FRAMES

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